What Do Technology and Chocolate Have in Common?

For Todd Masonis and Cameron Ring, starting a chocolate-making business hasn’t differed too much from launching a technology startup.

The Stanford University friends co-founded Plaxo, an online address book, almost a decade ago and sold it to Comcast for over $150 million in 2008.

Shortly thereafter, Masonis and Ring began dabbling in chocolate. They wanted to make their product from scratch, beginning with cracking the cacao beans, unlike most chocolate sold in the U.S., most of which comes from the same source and is then crafted with vanilla or other ingredients. In a friend’s garage, they started to purchase and build the equipment they needed to process cacao (imported from Africa) and mold it into chocolate bars.

Just as they did when developing Plaxo, Masonis and Ring took a data-driven approach to making chocolate. They conducted market research, such as studying predecessors like Scharffen Berger (which the Hershey Co. acquired and shut down). They took a trip to Madagascar to learn about the farm from which they were procuring some of their cacao beans. (In addition to Madagascar, they also source cacao beans from Venezuela and the Dominican Republic.)

Masonis and Ring experimented with different elements of the production process, such as how long to roast the cacao beans for the best taste. They ran small-batch trials, changing one variable at a time. And, of course, they kept track of and compared the results, enlisting friends in blind taste tests and gauging their reactions.

Just as in The Lean Startup model, Masonis and Ring also didn’t spend much time on making things “pretty.” Instead, they continuously tweaked their equipment, duct-taping parts together when necessary.

“The methodology of ‘let’s quickly iterate, let’s identify when we have something good, let’s identify when something doesn’t work out, and let’s try different parameters’ — all of that is the same thing you do in tech,” Ring says. “That is where a lot of the focus and time goes, to iterating quickly and doing testing. But rather than testing web pages, you’re tasting samples.”

Ultimately, Masonis and Ring realized that their family and friends enjoyed their chocolate, so they also began offering it at San Francisco’s Underground Market and entering contests. “People do get more excited about chocolate than internet startups,” Masonis notes.

In 2010, Masonis and Ring launched Dandelion Chocolate in San Francisco, where they are busy producing chocolate for about 50 retailers and fulfilling orders for their online store. They also plan to open a retail store, cafe, and factory in the city’s Mission District before the end of the year.